Dieselgate Rumbles On, Affecting More Than Just Volkswagen – Steel, Aluminum, Copper, Stainless, Rare Earth, Metal Prices, Forecasting

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The damage to brand is extending far beyond Volkswagen.

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The whole German car industry, once held up as the paradigm of quality and professionalism, is feeling the aftershocks of Volkswagen’s emissions testing deceit (popularly dubbed Dieselgate).

The challenge for the German auto industry is made all the more severe because of the industry’s reliance on the diesel engine.

According to a Financial Times article, Germany’s carmakers will upgrade 5.3 million diesel vehicles to reduce their harmful emissions as they scramble to save the country’s manufacturing image and the technology so badly tarnished by the Volkswagen test-rigging scandal.

The 5.3 million cars to be upgraded include 3.8 million Volkswagen vehicles — 2.5 million of which had already been recalled over the emissions issue.

Some 900,000 Daimler cars are involved, plus 300,000 BMWs, as well as a few Opel vehicles, the report states.

The urgency is compounded by reports that a number of German cities, fed up with high levels of air pollution, are contemplating driving bans on diesel vehicles — a move that would devastate the auto sector, the Financial Times reports.

At a recent summit, German carmakers said they would provide free-to-owners software updates for their Euro 5 and Euro 6-generation diesel cars to curb emissions of nitrogen oxide (NOx) by 25-30%. But welcome as such an improvement would be — if the owners and the market could believe that the manufacturers’ claims were accurate — it may still not be enough.

In the face of municipalities struggling to deal with high levels of NOx emissions, the Financial Times reports car companies are considering hardware upgrades to further curb emissions, in addition to an industry-funded scrappage scheme to pull older Euro 4 vehicles off the road.

The sums involved and the willingness of automakers to meet those costs underlines their expectation that without significant action, city bans on diesel cars are a real possibility.

According to the European Automobile Manufacturers’ Association, 50% of new passenger cars delivered last year had diesel engines, with only 46% petrol and the balance hybrid or electric. German manufacturers’ production programs and supply chains are predicated on that balance broadly continuing through the end of the decade.

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